Here & Now

Frederica Freyberg:
The federal government is being forced to return more than $165 billion in collected tariffs to domestic importers and the online portal to request those refunds went live this week. The U.S. Supreme Court struck down President Trump’s tariffs, resulting in the order to refund the import taxes. Wisconsin businesses are looking to get some relief, including Viroqua-based Wonderstate Coffee, with its three locations across the state. CEO TJ Semanchin joins us now from Viroqua and thanks a lot for being here.

TJ Semanchin:
It’s good to be here. Thank you.

Frederica Freyberg:
So first question, how much did tariffs cost you?

TJ Semanchin:
Yeah, we paid almost $140,000 in tariffs last year.

Frederica Freyberg:
That’s a big number for any business but in this tariff discussion is coffee unusual because it’s almost all imported?

TJ Semanchin:
Yeah. We have been saying this from the get-go that we really didn’t understand the purpose or the intent of taxing and tariffing a product that we can’t even, you know, promote domestic production of. All coffee is grown in the tropics. There’s a tiny bit grown in Puerto Rico and Hawaii, but not close to being able to meet the U.S. demand. So we were, you know, paying a tax that we didn’t even understand what the impact was, was for.

Frederica Freyberg:
So describe for me where you source your coffee from. What country?

TJ Semanchin:
Yeah, we source a lot of coffee from Latin America. From places that people think about with coffee like Colombia, but also Peru, Guatemala, Honduras, Mexico, and then also in Africa. We bring in a lot of coffee from Ethiopia, which is the birthplace of coffee, and also smaller countries like Rwanda and Burundi, Kenya.

Frederica Freyberg:
What of the cost of the tariffs meant for your business?

TJ Semanchin:
Yeah, last year was really challenging. It was unexpected. You know, my 25 years in coffee, we’ve never even once considered a tariff on our coffee that we import. So it was a curve ball. And already in a challenging business climate where other costs are going up, like health care, shipping costs, things like that, that this was just one more headache. And again, not being expected at all. We had to deal with these costs. One of the things that people don’t quite realize is we had to pay for the tariff before we even got the product in the country. So, you know, this is before we could even sell it. We had to borrow money to pay the tariff. So we were then paying interest costs on the money we borrowed for the tariffs. So all these things were compounding and just making it harder and harder for us.

Frederica Freyberg:
Have you gone online to request a refund and if so, how is that process going?

TJ Semanchin:
Yeah, we technically are not the importer of record, so we work with brokers who do a lot of the logistics for us. So their names are the ones that are on record for being the importer. So we’re working with them and they — as one of their clients and they are applying for those refunds. And we haven’t gotten any word of what the progress is or, you know, there’s a lot of uncertainty on how this process is going to unfold.

Frederica Freyberg:
Do those tariffs, as significant as they were for a small business, get passed along then to your customers?

TJ Semanchin:
Yeah. In some way or fashion they did. We had again — last year was challenging in a lot of ways. Coffee itself — the cost, the commodity price of coffee — skyrocketed last year. So we were paying a tariff on what was already historical costs for coffee. So all these things were compounding. And we did have a price increase last year that we passed on to our customers. And tariffs were a part of that. So the — you know, how much of that was the tariffs gets a little confusing. And, you know, just because there was a lot of factors.

Frederica Freyberg:
What has business planning been like over the course of these changeable tariffs?

TJ Semanchin:
We had to reforecast our profit and our budget last year. We even pulled back on some investments in growth. We decided not to buy a piece of equipment last year just because of the business climate. This would have been expanding our production capabilities. And we — you know, this was a piece of equipment that the one that we’re looking at was mostly built in Wisconsin. So we did not, you know, invest. And we did not make that purchase. So you could see even where the ripple effects might be. But we did pull back on our kind of expectations for growth and profit and even hiring and being able to invest in our staff. That, you know, coming into 2026 with the change in tariffs and it feels like, you know, we are a little more optimistic kind of going — we’re going back a whole year where we kind of came into 2025. We’re kind of coming back into 2026 with that perspective. But I would say that it felt like a whole year of just kind of a holding pattern.

Frederica Freyberg:
How optimistic are you that you will get the tariffs that you paid refunded?

TJ Semanchin:
I’m a pretty optimistic person, so I put our chances at better than 50%. But again, I’ll believe it when the money is in our bank because again, this has been such a uncertain process from the beginning. We’re hoping that the administration doesn’t fight as the, you know, as this portal is open and money actually starts flowing, that they don’t cut off those funds. But we don’t, you know, we don’t know. We’re not counting on it until we actually have the money in our bank, which might be months or a year from now. We don’t know.

Frederica Freyberg:
Not banking on it. All right, TJ Semanchin, thanks very much.

TJ Semanchin:
All right, thank you.